Vehicles and electrical appliances targeted and may be subsidized

BEIJING - New measures will be introduced to boost consumption, especially for vehicles and electrical appliances, as export demand weakens.

With tax rebate policies on vehicles and appliances having expired or due to expire, "new measures are in the pipeline," to boost consumption, said Huang Hai, former assistant minister of commerce and member of the economic and trade policy consulting committee affiliated to the Ministry of Commerce.

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"The Ministry of Commerce has drafted a proposal to continue the stimulus programs in the coming few years, but in different ways, and they are expected to cover vehicles and those related to real estate, say household appliances," Huang told China Daily in an exclusive interview.

The measures may include subsidies for consumers in affordable housing to buy appliances and for those planning to change their cars.

Ministry of Commerce spokesman Shen Danyang also said the ministry is mulling over launching new programs, expected to be announced next week, on expanding domestic consumption.

The ministry is expected to hold the National Commerce Work Conference on Thursday and Friday, during which Commerce Minister Chen Deming will make a keynote speech.

Huang also disclosed that under the instructions of Premier Wen Jiabao a national circulation conference, the first of its kind, will be held around April.

Government officials will discuss how to introduce concrete measures to boost consumption at the conference, he added.

More than 10 central government departments including the Ministry of Commerce, the National Development and Reform Commission and the Ministry of Finance, are expected to make proposals after conducting research before the conference, Huang said.

China has sought to sustain fast economic growth through boosting domestic consumption, given the fact that export growth has been declining during the past few months with demand weakening from the European Union, China's largest trade partner.

In November 2011, the nation's exports increased by 13.8 percent from a year earlier, the smallest gain since 2009, according to the General Administration of Customs.

The Ministry of Commerce has predicted that a slowdown in the country's export growth could continue at least into the first quarter of 2012 with a "more severe" outlook.

"This year in China will be all about trying to ensure a soft landing," said Jim O'Neil, chairman of Goldman Sachs Asset Management.

"Growth, under downward pressure from weakening exports and a fall in government-sponsored investment, will have to be led by stronger personal consumption if the economy is to grow by more than 8 percent."

It was agreed at the annual Central Economic Work Conference in December that China will be committed to expanding domestic consumption and improving people's livelihood while trying to stabilize exports.

Since the global financial crisis in 2008, the government has launched a series of preferential polices encouraging local consumers, through subsidies, to renew or purchase household appliances and cars.

"No matter whether the nation's economy slows down or not, China will have to change its economic growth model to consumption-oriented, rather than export- or investment-driven," said Lu Zhengwei, chief economist with Industrial Bank Co Ltd.

"We have to sustain relevant preferential policies."

In December 2007, China launched the pilot tax rebate program for household appliances which was later introduced nationally.

According to the Commerce Ministry, by the end of October 2011, the accumulative sales of household electrical appliances under the programs reached 200 million units, worth 457.6 billion yuan ($69 billion).

"The trade-in subsidy programs should be reinitiated as the new year comes, as it is not only a way to stimulate consumption, but also a guarantee of production tools for the large population in rural areas," said Jia Xinguang, an independent auto analyst based in Beijing.

Fan Jianping, director of economic forecasting at the State Information Center, said China's retail sales may grow by 13.2 percent this year.

China Daily